Lloyds reprivatisation: Back to normality – sadly

http://www.theguardian.com/commentisfree/2013/sep/17/lloyds-reprivatisation-back-normality-sadly

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Say this for George Osborne: he has a gift for timing. Five years, to the day, after Lloyds bought HBOS – thus sealing its fate as one of the biggest basket cases in banking – the chancellor announced that he had managed to sell a £3bn slice of the mortgage lender back to the private sector. Perhaps the critics are right and the Treasury could have held out for a bit longer, got a higher price and netted more than its £60m profit – but that would have denied the history graduate at No 11 his chance to inscribe a punctuation mark in Britain's contemporary economic history. Nor would the skilled tactician have forgone the opportunity to reiterate the now-familiar message that the economy is moving from "rescue to recovery".

In the Osborne narrative, the great aberration in recent British history came in the latter days of Labour when Tony Blair and Gordon Brown took it in turns to blow up the economy and to stick the public with the consequences. No word here about sub-prime or Lehmans or the Conservative part in unleashing finance. He even claimed yesterday that Labour had "forced" taxpayers to bail out the banks.

This cynical rewrite of history is made all the more breathtaking by Labour's failure to counter it. But no record exists of the Conservatives begging Alistair Darling not to nationalise Lloyds or RBS. No trace can be found from 2008 of how David Cameron had his own plan to save the finance sector – for the simple reason that the then leader of the opposition, fresh from his husky- and hoodie-hugging, had no ideas. As Mervyn King was reported (in a leaked US diplomatic cable) to have said, Mr Osborne and Mr Cameron "had a tendency to think about issues only in terms of politics, and how they might affect Tory electorability [sic]". It is true that the shadow chancellor later opposed quantitative easing – before he came to office and encouraged the Bank of England in its £375bn quantitative-easing programme. It is a sign of how feeble Labour's fighting machine is that the party could not manage a strong rebuttal.

The Tories want to portray the reprivatisation of Lloyds as part of Britain's normalisation. But what did normality look in the British economy of 2006? A housing bubble pumped up by bankers lending recklessly and paying themselves vast sums for doing so. What do we see at Lloyds seven years on? A chief executive, António Horta-Osório, whose bonus is pegged to his company's share price – surely a red flag to short-termism. A bank boasting about offering mortgages worth 95% of house prices and, as the country's biggest property lender, doing very nicely out of Mr Osborne's Help to Buy scheme. An institution still embroiled in the PPI mis-selling scandal. The normalisation of Lloyds is a sign of how little progress this government has made in reforming our banks.

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